4 Things Every Federal Employee Should Understand Before Submitting Their Final Retirement Paperwork

Missy E
November 14, 2025

Key Takeaways

Once you submit your federal retirement paperwork, reversing the decision is complicated and often impossible. Ensure you fully understand the process and the long-term financial impact before making it final.
Your pension, healthcare, and Thrift Savings Plan (TSP) will determine your financial stability in retirement. Reviewing your estimated benefits carefully and making informed choices is crucial.

Understanding the Final Steps in Your Federal Retirement Journey

Retiring from federal service is a significant milestone, but the paperwork involved is more than just a formality. Once you submit your final retirement application, there’s no easy way to take it back. Before making that move, you need to be confident in your choices. Missing a detail or misunderstanding how your benefits work could lead to financial surprises down the road. Here are four key things you should know before submitting your final retirement paperwork.

1. Your Pension Calculation Needs to Be Spot On

Your federal pension is the foundation of your retirement income, and it’s crucial to verify that you’re receiving the correct amount. Under the Federal Employees Retirement System (FERS), your pension is calculated based on your High-3 average salary and years of service. This means:

Your High-3 salary is the average of your highest-earning consecutive 36 months.
Your pension formula under FERS is 1% of your High-3 salary per year of service (or 1.1% if you retire at 62 or later with at least 20 years of service).

Things to Double-Check

Verify your Service Computation Date (SCD) – This affects your creditable service years and ultimately your pension amount.
Check for unpaid deposits and redeposits – If you had breaks in service, military time, or temporary service, you might need to make a deposit to count those years.
Confirm your survivor benefit election – If you want your spouse to receive a portion of your pension after your death, you must elect this option when submitting your retirement paperwork.

2. Timing Matters More Than You Think

When you retire can have a major impact on your first pension payment and overall financial situation. The federal government follows a strict retirement processing timeline:

FERS employees typically retire on the last day of the month to begin receiving pension payments the following month.
If you retire in the middle of a month, you might have to wait longer for your first pension check.

Other Timing Considerations

Annual and Sick Leave Payouts – Unused sick leave can increase your pension calculation, but it does not count toward meeting retirement eligibility. However, annual leave is paid out in a lump sum, and this can affect your taxable income for the year.
Federal Pay Raises and COLAs – If you’re close to a federal pay raise or a Cost-of-Living Adjustment (COLA) increase, delaying retirement could slightly boost your pension calculation.

3. Healthcare and Insurance Decisions Are Permanent

Healthcare is one of the most critical aspects of retirement, and some choices you make now will be irreversible. If you’re covered under the Federal Employees Health Benefits (FEHB) Program, you can keep your coverage in retirement as long as:

You retired with an immediate annuity (not deferred retirement).
You were enrolled in FEHB for at least the last five years before retiring.

Medicare and FEHB Coordination

At age 65, you become eligible for Medicare Part A and Part B. Many retirees enroll in Part B to reduce out-of-pocket costs, though it comes with an additional premium.
Some FEHB plans offer Medicare coordination benefits, like reduced co-pays and lower deductibles when enrolled in both programs.

Life Insurance and Long-Term Care

Federal Employees’ Group Life Insurance (FEGLI): If you want to continue coverage into retirement, you need to elect it before submitting your paperwork. Premiums increase significantly as you age.
Long-Term Care Insurance: The Federal Long-Term Care Insurance Program (FLTCIP) can be a crucial safeguard, but enrolling after retirement may not be an option.

4. Your Thrift Savings Plan (TSP) Withdrawal Strategy Will Shape Your Retirement

Your TSP is a critical part of your retirement income, but how you withdraw funds will impact your taxes and long-term savings. Once you leave federal service, you can:

Keep your funds in the TSP and take withdrawals as needed.
Set up monthly payments to create a steady income.
Roll over your TSP into another retirement account.

Tax Considerations

Required Minimum Distributions (RMDs) begin at age 73. If you don’t take the required withdrawals, you could face significant tax penalties.
Traditional TSP withdrawals are taxed as ordinary income, so timing your withdrawals strategically can help reduce your tax burden.
If you have a Roth TSP, your withdrawals are tax-free as long as you meet the required conditions.

TSP Withdrawal Mistakes to Avoid

Withdrawing too much too soon – Your TSP needs to last for decades, so taking large withdrawals early can drain your funds faster than expected.
Not accounting for market downturns – If the market takes a hit, withdrawing funds at a low point can reduce your overall savings.
Forgetting about spousal consent – If you’re married, your spouse must sign off on any withdrawal that does not provide them with a joint survivor annuity.

Preparing for Your Federal Retirement with Confidence

Retirement from federal service is a major life transition, and submitting your final paperwork is a decision that should not be rushed. Understanding your pension, healthcare options, and TSP withdrawal strategies will help you retire with peace of mind. Take the time to review your benefits, check for errors, and consider the timing of your retirement carefully. A well-planned retirement ensures that you maximize your hard-earned benefits and avoid costly mistakes.

If you have any questions or need further guidance, speak with a licensed agent listed on this website. They can help ensure you make the right decisions for a secure and comfortable retirement.